Copper prices drifted higher on Wednesday, still basking in the glow of stimulus measures unleashed by top metals consumer China amid hopes that more support is on its way.
Three-month copper on the London Metal Exchange (LME) CMCU3 rose 0.4% to $10,023 per metric ton in official open-outcry trading.
LME copper has gained 7% since U.S. interest rates were cut on Sept. 18, which was followed by several announcements by China of new stimulus programmes.
China accounts for about half of the world’s metals consumption.
Trading volumes on Wednesday were thin as China and India, one of Asia’s fastest growing metals markets, were closed for holidays. Higher metals prices could also deter physical demand.
Rising oil prices, which jumped more than 2% on conflict in the Middle East, also supported metals because that boosts the cost of mining and processing minerals.
The prospect of further US interest rate cuts which could boost global economic activity also aided sentiment.
Over the weekend, China relaxed rules for homebuyers and moved to lower mortgage rates to support the beleaguered property market, signaling a potential rebound in demand for construction materials like copper.
The People’s Bank of China also slashed banks’ reserve requirement ratio by 50 basis points last week, which is expected to free up 1 trillion yuan in capital, and lowered key medium- and short-term rates to encourage borrowing and boost liquidity.
Technical Outlook – Copper Futures
Copper prices recovered nearly 0.5%, closing at 856.60 compared to the previous session’s close of 851.65.
According to the technical outlook from 25 September, the market maintained its bullish trend, reaching both forecasted levels of 838.50 and 842.50. Momentum in the base metals remains positive.
Any short-term consolidation around the 852.50-855 zone is likely to attract buying interest in the near term. Prices are expected to test the next resistance levels at 862-868 soon.
On the downside, initial support is seen at 833.00, with further support at 825-818.00 if breached.
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Commodity Samachar Securities
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